Under existing law, the Franchise Tax Board is authorized to impose a penalty for failure to file a return upon notice and demand and failure to furnish information in response to a written request. Under existing law, this penalty amount is 25% of the amount of tax determined to be owed or of any deficiency tax assessed by the Franchise Tax Board.

This bill would instead bill, instead, for taxable years beginning on and after January 1, 2018, would reduce the penalty amount that the Franchise Tax Board may impose to 15% of the amount of total unpaid tax as of the date and time the notice and demand is issued or of any deficiency tax assessed. The bill also would require the Franchise Tax Board, upon request by a taxpayer, to abate this penalty if the Franchise Tax Board has not imposed on the taxpayer a penalty for these reasons in the year of the request or prior 4 years and, as of the date of the request for abatement, the taxpayer has filed the information or return and has paid all tax due.

Under existing law, the Franchise Tax Board is authorized to impose a penalty for failure to file a return upon notice and demand and failure to furnish information in response to a written request. Under existing law, this penalty amount is 25% of the amount of tax determined to be owed or of any deficiency tax assessed by the Franchise Tax Board.

This bill would instead reduce the penalty amount that the Franchise Tax Board may impose to 15% of the amount of total unpaid tax or of any deficiency tax assessed.

Date of Hearing: May 17, 2017

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 449

Author:(Calderon) – As Amended Ver:May 1, 2017

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill modifies the Franchise Tax Board’s (FTB's) “demand penalty.” Specifically, this bill:

1. Reduces the demand penalty, beginning on January 1, 2018, that the Franchise Tax Board (FTB) may impose from 25% to 15%, and shifts imposition of the penalty from the amount of total tax due to the amount of unpaid tax, if certain conditions apply.
2. Requires the FTB to abate the penalty if, at the time that a taxpayer requests an abatement, the taxpayer has not been subject to the penalty in the preceding four years, has paid full the tax that is due, and has filed the information or return.

FISCAL EFFECT:

Annual penalty revenue loss of $8.3 million beginning in 2019-20.

COMMENTS:

1. Background. The FTB imposes numerous penalties in order to increase taxpayer compliance and collect taxes owed. One such penalty is the “demand penalty,” which is equal to 25% of the total tax liability. The demand penalty generally occurs when a taxpayer fails to file a tax return after receiving a “Demand for Tax Return” notice, which is sent to taxpayers within four years of a previously issued “Request for Tax Return.” The penalty is assessed if the taxpayer fails to file the return within the specified time of this new demand. Thus, the demand penalty is not automatically imposed on a first-time non-filer who does not respond to the notice to file. However, the penalty is imposed on top of any separate penalty the taxpayer may have already incurred for failure to file a return.
2. Imposition of the penalty. As currently structured, the demand penalty is worth 25% of the estimated tax liability even if some taxes have already been paid. This is because the intent of the demand penalty is to penalize a taxpayer’s failure to respond to the FTB’s notice and demand to file and not to penalize the taxpayer’s failure to pay taxes. For instance, a Demand for Tax Return may be sent to a taxpayer who withheld taxes in excess of what they owed but failed to file a return. In this case, the taxpayer owes no tax but has hindered FTB’s administration by not filing a return, and the demand penalty is based on the original tax estimate and not the remaining unpaid tax.
3. Purpose. According to the author, the current structure of the demand penalty is excessive and is not appropriate for some situations. The author notes that the penalty is 25% of the original tax liability even if the taxpayer has paid all the tax due or is even owed a refund. AB 449 aims to reduce the impact of the penalty and restructure it so that it is based on the remaining tax owed and not the original tax liability amount.
4. Who will pay the penalty? Recent amendments to AB 449 require the FTB to abate the penalty if certain conditions apply. As drafted, when a taxpayer requests an abatement and, they have submitted their tax return and paid all tax liabilities at the time of that request, FTB must waive the penalty. This option is not available to those who have received a demand penalty in the last four 4 years, thereby ensuring that “bad actors” will have to pay the penalty no matter what. In effect, this option allows taxpayer to submit a return and pay down all tax liabilities after being notified of a penalty in order to waive that penalty.

Analysis Prepared by: Luke Reidenbach / APPR. / (916) 319-2081

Date of Hearing: April 24, 2017

ASSEMBLY COMMITTEE ON REVENUE AND TAXATION

Sebastian Ridley-Thomas, Chair

ABPCA Bill Id:AB 449 (

Author:Calderon) – As Introduced Ver:February 13, 2017

Majority vote. Fiscal committee.

SUBJECT: Income taxes: administration

SUMMARY: Reduces the demand penalty the Franchise Tax Board (FTB) may impose from 25% to 15%, and shifts imposition of the penalty from the amount of estimated tax due to the amount of unpaid tax. Specifically, this bill:

1. Reduces the demand penalty the FTB may impose when a taxpayer fails to provide information, as specified, upon notice and demand by the FTB from 25% to 15%.
2. Specifies that the demand penalty is imposed on the amount of the total unpaid tax, instead of the amount of tax determined pursuant to Revenue and Taxation Code (R&TC) Section 19087.

EXISTING LAW:

1. Authorizes the FTB to impose a penalty when a taxpayer fails to furnish information requested in writing or fails to file a required return, after notice and demand by the FTB to provide the information or return, unless the failure is due to reasonable cause and not willful neglect. The penalty is 25% of total tax liability assessed without regard to any payments or credits. (R&TC Section 19133.)
2. Provides that for individuals subject to tax under the Personal Income Tax Law, the FTB will only impose the demand penalty if the following occur:
3. The taxpayer fails to timely respond to a current Demand for Tax Return in the manner prescribed; and,
4. The FTB has proposed an assessment of tax under R&TC Section 19087 after the taxpayer failed to timely respond to a Request for Tax Return or a Demand for Tax Return at any time during the four-taxable-year period preceding the taxable year for which the current Demand for Tax Return is issued. (California Code of Regulations, Title 18, Section 19133.)
5. Requires the FTB to impose a filing enforcement cost recovery fee, as specified, for entities that do not file a tax return within 25 days after formal legal demand to file the tax return is mailed. (R&TC Section 19254.)
6. Requires the FTB to impose various other penalties in its administration of the PIT Law and the Corporation Tax (CT) Law, including penalties for:
7. Failure to file a return or late filing penalty imposed on a taxpayer who is required to file a return, but fails to do so by the due date. The penalty is 5% of the tax due, after applying any timely payments, for every month that the return is late, up to a maximum of 25%, with a minimum penalty for individuals and fiduciaries that is the lesser of $135 or 100% of the tax required to be shown on the return (R&TC Section 19131); and,
8. Failure to pay tax or late payment penalty imposed on a taxpayer failing to pay tax by the due date. The penalty is 5% of the total tax unpaid and 0.5% for every month the remaining tax was late for up to 40 months, not to exceed 25% of the total unpaid tax. However, this penalty is not imposed if, for the same taxable year, the sum of the demand penalty and the failure to file penalty are equal to or greater than this penalty, and if this penalty is greater than the sum of the demand penalty and the failure to file penalty, then this penalty is calculated to be the amount which exceeds the sum of the other two penalties. (R&TC Section 19132.)

FISCAL EFFECT: The FTB estimates General Fund revenue losses of $12 million in fiscal year (FY) 2017-18, $32 million in FY 2018-19, and $47 million in FY 2019-20.

COMMENTS:

1. The author has provided the following statement in support of this bill:

AB 449 would amend R&T Code §19133 to remove its current injustice. This code section currently provides that a taxpayer who does not respond to a notice and demand letter within the time indicated in the letter is subject to a 25% penalty on the total tax liability – even if the taxpayer has paid all the tax due and even is owed a refund. This is an outrageous penalty to pay for failing to respond to a form letter – one which may not have been received, or may have been ignored because one had already paid all tax owed (and then some). The penalty for failing to respond to a letter is the same as the penalty for failing to pay taxes, possibly as much as $25,000 or more.

This penalty apparently is unique to California; there is no analog for it either at the federal level or in any major industrial state. Nor is there any apparent reason why this additional penalty is needed in California, where all other jurisdictions seem to get by just fine without it.

AB 449 will address this issue by reducing the penalty amount that the Franchise Tax Board may impose to 15% of the amount of tax determined to be owned by the FTB, while taking into account taxes paid. This will ensure that this additional penalty is imposed only where arguably necessary, and in an amount that is justifiable.

1. Supporters of this bill state the following:

Penalty abatement, such as the one proposed in AB 449, would establish an equitable approach that considers whether a taxpayer already has remitted taxes, but failed to file a return or failed to provide additional information. Additionally, it would encourage some taxpayers to come into compliance who otherwise would be barred due to the significant financial hardship imposed by exorbitant penalties.

1. Committee Staff Comments:
2. Overview of FTB Penalties: The FTB imposes numerous penalties to increase taxpayer compliance and collect the proper amount of tax revenue due to California under the PIT Law and the CT Law. In addition to penalties imposed for failure to file (or late filing of a tax return) and failure to pay tax (or late payment of tax), among others, the FTB may also impose a penalty for failure to furnish information requested in writing or failure to file a required return, after notice and demand by the FTB to provide the information or return ("demand penalty"). Each penalty may be subject to certain exceptions, with the demand penalty, failure to file penalty, and failure to pay tax penalty statutorily abated if reasonable cause and lack of willful neglect can be demonstrated. To establish reasonable cause, a taxpayer must show that the failure to reply to the notice and demand occurred despite the exercise of ordinary business care and prudence. Examples of reasonable cause include death or illness of the taxpayer, destruction of the taxpayer's records by fire or flood, and the taxpayer's temporary absence from home.
3. Implementation of the Demand Penalty: As noted in the FTB's analysis of this bill, the purpose of the demand penalty is to penalize a taxpayer's failure to respond to the FTB's notice and demand to either file a return or furnish requested information, not to penalize a taxpayer's failure to pay taxes. As such, existing law provides that the FTB may impose a demand penalty of 25% on the amount of estimated tax due pursuant to R&TC Section 19087, which allows the FTB to propose to assess the amount of tax, interest, and penalties due when a taxpayer fails to file a return. According to the FTB, the penalty is specific to tax years and not items demanded, meaning that multiple demands for returns or information would only be subject to one demand penalty during the tax year in question if the taxpayer failed to respond.

With regard to individual non-filers, the FTB's historical administrative practice was to impose the demand penalty in all applicable circumstances even though existing law authorizing the demand penalty does not require it to be imposed. In 2004, a regulation was promulgated by the FTB to provide specific direction regarding when the demand penalty would be imposed on individual non-filers. The regulation distinguishes two different notices that taxpayers may receive, a Request for Tax Return (which does not advise that that failure to respond will make the taxpayer liable for the demand penalty) or Demand for Tax Return (which does advise that failure to respond will make the taxpayer liable for the demand penalty). Under the regulation, the FTB will only impose the demand penalty on individuals if: (1) the taxpayer fails to timely respond to a current Demand for Tax Return, and (2) the FTB has proposed an assessment of tax after the taxpayer failed to timely respond to a Request for Tax Return or Demand for Tax Return during the four tax years prior to the taxable year for which the current Demand for Tax Return is issued.

The FTB further explains that a Request for Tax Return is first sent to a taxpayer that appears to have a filing requirement but no record of filing a return, and a Demand for Tax Return is sent to a taxpayer that fails to file a return within four years of a previously issued Request for Tax Return, with the demand penalty assessed if the taxpayer fails to file the return within the specified time on the demand. As such, the demand penalty is not automatically imposed on a first-time non-filer who does not respond to the notice to file, and is only imposed when the taxpayer has previously failed to respond to a notice to file. However, the penalty is imposed on top of any separate penalty the taxpayer may have already incurred for failure to file a return.

1. Shifting Imposition of the Penalty: This bill proposes to lower the demand penalty from 25% to 15%, and to shift imposition of the penalty from the amount of estimated tax due to the amount of unpaid tax. As noted in the FTB's analysis of this bill, no definition for "unpaid tax" is provided, which may lead to disputes between taxpayers and administrators about its intent. However, to the extent that "unpaid tax" is intended to mean any estimated outstanding tax liability that has not been previously paid, withheld, or otherwise remitted to the FTB, it is important to note that shifting the imposition of the penalty in this manner may lead to instances when the demand penalty is effectively eliminated. For example, if an individual who did not file a return is estimated to have $1,000 in tax due but over the course of the year had $1,100 in tax withheld, this individual would have no outstanding tax liability and instead be owed a tax refund. If the individual failed to file a return and then failed to respond to a notice and demand to file a return, the demand penalty imposed would be $250 (25% of $1,000) under existing law but $0 under this bill (15% of $0). If the individual only had $900 in tax withheld and paid no additional income tax, the demand penalty imposed would still be $250 under existing law but $15 under this bill (15% of $100). If the individual had no tax withheld and had not paid any income tax by other means, the demand penalty imposed would still be $250 under existing law but $150 (15% of $1,000) under this bill.

Although it may appear justifiable that taxpayers who do not owe tax pay no demand penalty or a lowered demand penalty, the original programmatic intent of the demand penalty was to penalize a taxpayer's failure to respond to the FTB's notice and demand to either file a return or furnish requested information, and not to penalize a taxpayer's failure to pay taxes (which is subject to a separate penalty based on taxes not paid). Tax returns are important documents necessary for efficient administration and collection of proper tax revenues, especially to account for large taxpayers with complicated determinations of tax irrespective of whether the tax has been paid. Shifting imposition of the penalty from the amount of estimated tax due to the amount of unpaid tax would benefit taxpayers without an estimated outstanding tax liability, although both sets of taxpayers are not filing returns and responding to requests to do so as required under existing law. To the extent that the existing demand penalty is perceived as overly punitive, the Committee may wish to consider whether it is equitable to provide greater penalty relief to a certain subset of taxpayers despite shared non-compliance with the provision of law that triggered the penalty in the first place.

1. Related Legislation:
2. AB 1171 (Obernolte) extends from six months to seven months the extension of time FTB may grant taxpayers to file a return, declaration, statement, or other required document. AB 1171 is pending hearing by this Committee.
3. SB 375 (Bradford) requires the FTB to provide relief from a penalty otherwise applicable for failure to file a tax return or failure to pay tax when due, as specified. SB 375 has been placed on the Senate Committee on Appropriations' Suspense File.
4. Prior Legislation: AB 1450 (Chang), of the 2015-16 Legislative Session, would have authorized the FTB to impose a variable rate demand penalty of up to 10% and consider whether the taxpayer made a good faith effort to comply with the demand in determining the amount of the penalty. AB 1450 was never heard by this Committee and returned to the Chief Clerk without further action.

REGISTERED SUPPORT / OPPOSITION:

Support

California Chamber of Commerce

California Society of Enrolled Agents

California Taxpayers Association

Opposition

None on file

Analysis Prepared by: Irene Ho / REV. & TAX. / (916) 319-2098

Date of Hearing: March 27, 2017

ASSEMBLY COMMITTEE ON REVENUE AND TAXATION

Sebastian Ridley-Thomas, Chair

ABPCA Bill Id:AB 449 (

Author:Calderon) – As Introduced Ver:February 13, 2017

Majority vote. Fiscal committee.

SUBJECT: Income taxes: administration

SUMMARY: Reduces the demand penalty the Franchise Tax Board (FTB) may impose from 25% to 15%, and shifts imposition of the penalty from the amount of estimated tax due to the amount of unpaid tax. Specifically, this bill:

1. Reduces the demand penalty the FTB may impose when a taxpayer fails to provide information, as specified, upon notice and demand by the FTB from 25% to 15%.
2. Specifies that the demand penalty is imposed on the amount of the total unpaid tax, instead of the amount of tax determined pursuant to Revenue and Taxation Code (R&TC) Section 19087.

EXISTING LAW:

1. Authorizes the FTB to impose a penalty when a taxpayer fails to furnish information requested in writing or fails to file a required return, after notice and demand by the FTB to provide the information or return, unless the failure is due to reasonable cause and not willful neglect. The penalty is 25% of total tax liability assessed without regard to any payments or credits. (R&TC Section 19133.)
2. Provides that for individuals subject to tax under the Personal Income Tax Law, the FTB will only impose the demand penalty if the following occur:
3. The taxpayer fails to timely respond to a current Demand for Tax Return in the manner prescribed; and,
4. The FTB has proposed an assessment of tax under R&TC Section 19087 after the taxpayer failed to timely respond to a Request for Tax Return or a Demand for Tax Return at any time during the four-taxable-year period preceding the taxable year for which the current Demand for Tax Return is issued. (California Code of Regulations, Title 18, Section 19133.)
5. Requires the FTB to impose a filing enforcement cost recovery fee, as specified, for entities that do not file a tax return within 25 days after formal legal demand to file the tax return is mailed. (R&TC Section 19254.)
6. Requires the FTB to impose various other penalties in its administration of the PIT Law and the Corporation Tax (CT) Law, including penalties for:
7. Failure to file a return or late filing penalty imposed on a taxpayer who is required to file a return, but fails to do so by the due date. The penalty is 5% of the tax due, after applying any timely payments, for every month that the return is late, up to a maximum of 25%, with a minimum penalty for individuals and fiduciaries that is the lesser of $135 or 100% of the tax required to be shown on the return (R&TC Section 19131); and,
8. Failure to pay tax or late payment penalty imposed on a taxpayer failing to pay tax by the due date. The penalty is 5% of the total tax unpaid and 0.5% for every month the remaining tax was late for up to 40 months, not to exceed 25% of the total unpaid tax. However, this penalty is not imposed if, for the same taxable year, the sum of the demand penalty and the failure to file penalty are equal to or greater than this penalty, and if this penalty is greater than the sum of the demand penalty and the failure to file penalty, then this penalty is calculated to be the amount which exceeds the sum of the other two penalties. (R&TC Section 19132.)

FISCAL EFFECT: The FTB estimates General Fund revenue losses of $12 million in fiscal year (FY) 2017-18, $32 million in FY 2018-19, and $47 million in FY 2019-20.

COMMENTS:

1. Author's Statement: The author has provided the following statement in support of this bill:

AB 449 would amend R&T Code §19133 to remove its current injustice. This code section currently provides that a taxpayer who does not respond to a notice and demand letter within the time indicated in the letter is subject to a 25% penalty on the total tax liability – even if the taxpayer has paid all the tax due and even is owed a refund. This is an outrageous penalty to pay for failing to respond to a form letter – one which may not have been received, or may have been ignored because one had already paid all tax owed (and then some). The penalty for failing to respond to a letter is the same as the penalty for failing to pay taxes, possibly as much as $25,000 or more.

This penalty apparently is unique to California; there is no analog for it either at the federal level or in any major industrial state. Nor is there any apparent reason why this additional penalty is needed in California, where all other jurisdictions seem to get by just fine without it.

AB 449 will address this issue by reducing the penalty amount that the Franchise Tax Board may impose to 15% of the amount of tax determined to be owned by the FTB, while taking into account taxes paid. This will ensure that this additional penalty is imposed only where arguably necessary, and in an amount that is justifiable.

1. Arguments in Support: Supporters of this bill state the following:

Penalty abatement, such as the one proposed in AB 449, would establish an equitable approach that considers whether a taxpayer already has remitted taxes, but failed to file a return or failed to provide additional information. Additionally, it would encourage some taxpayers to come into compliance who otherwise would be barred due to the significant financial hardship imposed by exorbitant penalties.

1. Committee Staff Comments:
2. Overview of FTB Penalties: The FTB imposes numerous penalties to increase taxpayer compliance and collect the proper amount of tax revenue due to California under the PIT Law and the CT Law. In addition to penalties imposed for failure to file (or late filing of a tax return) and failure to pay tax (or late payment of tax), among others, the FTB may also impose a penalty for failure to furnish information requested in writing or failure to file a required return, after notice and demand by the FTB to provide the information or return ("demand penalty"). Each penalty may be subject to certain exceptions, with the demand penalty, failure to file penalty, and failure to pay tax penalty statutorily abated if reasonable cause and lack of willful neglect can be demonstrated. To establish reasonable cause, a taxpayer must show that the failure to reply to the notice and demand occurred despite the exercise of ordinary business care and prudence. Examples of reasonable cause include death or illness of the taxpayer, destruction of the taxpayer's records by fire or flood, and the taxpayer's temporary absence from home.
3. Implementation of the Demand Penalty: As noted in the FTB's analysis of this bill, the purpose of the demand penalty is to penalize a taxpayer's failure to respond to the FTB's notice and demand to either file a return or furnish requested information, not to penalize a taxpayer's failure to pay taxes. As such, existing law provides that the FTB may impose a demand penalty of 25% on the amount of estimated tax due pursuant to R&TC Section 19087, which allows the FTB to propose to assess the amount of tax, interest, and penalties due when a taxpayer fails to file a return. According to the FTB, the penalty is specific to tax years and not items demanded, meaning that multiple demands for returns or information would only be subject to one demand penalty during the tax year in question if the taxpayer failed to respond.

With regard to individual non-filers, the FTB's historical administrative practice was to impose the demand penalty in all applicable circumstances even though existing law authorizing the demand penalty does not require it to be imposed. In 2004, a regulation was promulgated by the FTB to provide specific direction regarding when the demand penalty would be imposed on individual non-filers. The regulation distinguishes two different notices that taxpayers may receive, a Request for Tax Return (which does not advise that that failure to respond will make the taxpayer liable for the demand penalty) or Demand for Tax Return (which does advise that failure to respond will make the taxpayer liable for the demand penalty). Under the regulation, the FTB will only impose the demand penalty on individuals if: (1) the taxpayer fails to timely respond to a current Demand for Tax Return, and (2) the FTB has proposed an assessment of tax after the taxpayer failed to timely respond to a Request for Tax Return or Demand for Tax Return during the four tax years prior to the taxable year for which the current Demand for Tax Return is issued.

The FTB further explains that a Request for Tax Return is first sent to a taxpayer that appears to have a filing requirement but no record of filing a return, and a Demand for Tax Return is sent to a taxpayer that fails to file a return within four years of a previously issued Request for Tax Return, with the demand penalty assessed if the taxpayer fails to file the return within the specified time on the demand. As such, the demand penalty is not automatically imposed on a first-time non-filer who does not respond to the notice to file, and is only imposed when the taxpayer has previously failed to respond to a notice to file. However, the penalty is imposed on top of any separate penalty the taxpayer may have already incurred for failure to file a return.

1. Shifting Imposition of the Penalty: This bill proposes to lower the demand penalty from 25% to 15%, and to shift imposition of the penalty from the amount of estimated tax due to the amount of unpaid tax. As noted in the FTB's analysis of this bill, no definition for "unpaid tax" is provided, which may lead to disputes between taxpayers and administrators about its intent. However, to the extent that "unpaid tax" is intended to mean any estimated outstanding tax liability that has not been previously paid, withheld, or otherwise remitted to the FTB, it is important to note that shifting the imposition of the penalty in this manner may lead to instances when the demand penalty is effectively eliminated. For example, if an individual who did not file a return is estimated to have $1,000 in tax due but over the course of the year had $1,100 in tax withheld, this individual would have no outstanding tax liability and instead be owed a tax refund. If the individual failed to file a return and then failed to respond to a notice and demand to file a return, the demand penalty imposed would be $250 (25% of $1,000) under existing law but $0 under this bill (15% of $0). If the individual only had $900 in tax withheld and paid no additional income tax, the demand penalty imposed would still be $250 under existing law but $15 under this bill (15% of $100). If the individual had no tax withheld and had not paid any income tax by other means, the demand penalty imposed would still be $250 under existing law but $150 (15% of $1,000) under this bill.

Although it may appear justifiable that taxpayers who do not owe tax pay no demand penalty or a lowered demand penalty, the original programmatic intent of the demand penalty was to penalize a taxpayer's failure to respond to the FTB's notice and demand to either file a return or furnish requested information, and not to penalize a taxpayer's failure to pay taxes (which is subject to a separate penalty based on taxes not paid). Tax returns are important documents necessary for efficient administration and collection of proper tax revenues, especially to account for large taxpayers with complicated determinations of tax irrespective of whether the tax has been paid. Shifting imposition of the penalty from the amount of estimated tax due to the amount of unpaid tax would benefit taxpayers without an estimated outstanding tax liability, although both sets of taxpayers are not filing returns and responding to requests to do so as required under existing law. To the extent that the existing demand penalty is perceived as overly punitive, the Committee may wish to consider whether it is equitable to provide greater penalty relief to a certain subset of taxpayers despite shared non-compliance with the provision of law that triggered the penalty in the first place.

1. Related Legislation:
2. AB 1171 (Obernolte) extends from six months to seven months the extension of time FTB may grant taxpayers to file a return, declaration, statement, or other required document. AB 1171 is pending hearing by this Committee.
3. SB 375 (Bradford) requires the FTB to provide relief from a penalty otherwise applicable for failure to file a tax return or failure to pay tax when due, as specified. SB 375 is pending hearing by the Senate Committee on Governance and Finance.
4. Prior Legislation: AB 1450 (Chang), of the 2015-16 Legislative Session, would have authorized the FTB to impose a variable rate demand penalty of up to 10% and consider whether the taxpayer made a good faith effort to comply with the demand in determining the amount of the penalty. AB 1450 was never heard by this Committee and returned to the Chief Clerk without further action.

REGISTERED SUPPORT / OPPOSITION:

Support

California Chamber of Commerce

California Taxpayers Association

Opposition

None on file

Analysis Prepared by: Irene Ho / REV. & TAX. / (916) 319-2098